The US Senate is investigating the merger of LIV Golf and the PGA Tour, and Saudi Arabia “threatens bankers and consultants with 20 years imprisonment if they cooperate.”
While the US Senate committee continues to investigate the merging of golf’s two once-aggressive factions, conversations are ongoing between the Tour and LIV’s backers, Saudi Arabia’s Public Investment Fund.
Bankers and consultants that assist PIF, however, have stated that they face “criminal and financial penalties” if they comply with the committee’s investigation.
A Bloomberg News story claims that the PIF filed a lawsuit against its advisors in a Saudi court last November, barring them from providing data to the US Senate committee on governmental affairs and homeland security.
This week in Washington, D.C., banker Michael Klein and executives from the consulting firms McKinsey, Boston Consulting Group (BCG), and Teneo Strategy spoke before legislators, arguing against cooperation.
According to prepared testimony from BCG’s Rich Lesser, “disclosing or disseminating such information imposes criminal penalties for up to 20 years of imprisonment.” The PIF has made it clear that doing so would violate Saudi law.
“We run the risk of financial and criminal penalties for the company as well as for individuals who work or reside in Saudi Arabia.” According to Klein, this includes CEOs and employees who work in Saudi Arabia, receiving penalties of 20 years in prison. During a hearing, Klein stated, “This represents aberrant behavior for a client and, quite frankly, for the PIF, who has historically been a client that has operated with best practices of governance with us.”
According to Bloomberg, the CEOs also stated that they are contesting the PIF’s action. They stated that they were trying to cut down on the number of redactions in the materials they sent to the Senate panel. For example, the majority of BCG’s 91-page document submission consisted of calendar invitations with the names of all attendees blacked out.
The PGA Tour revealed in June of last year the “framework agreement” for a surprise merger with the DP World Tour and the PIF, which finances the new rival league LIV Golf. Though the PGA Tour is reportedly still in talks with the PIF, it has added Strategic Sports Group, a new investment partner consisting of US-based sports ownership organizations.
Sen. Richard Blumenthal was dissatisfied with the consulting groups’ unwillingness to collaborate with the panel. It is unclear whether federal antitrust law will permit the PGA to combine with its sole competitor. Sen. Richard Blumenthal (D-Conn.) was dissatisfied with the consulting groups’ unwillingness to collaborate with the panel.
“What astounds me the most is that American corporations would not only accept this allegation, giving the Saudi government the authority to decide what can be provided to this subcommittee, but would also use it as an excuse to not cooperate with a legally issued congressional subpoena,” Blumenthal stated.
The PIF stated in a statement to Bloomberg that it was working “vigorously to streamline the delivery of requested information from our advisors in accordance with Saudi Arabian laws, which ought to be acknowledged as any other nation’s.”
Last week, a Senate committee led by Senator Blumenthal sent a letter to Al-Rumayyan asking for his assistance in allowing the committee to subpoena four US consulting firms that work for PIF.
Congress has been adamantly opposed to LIV Golf, and in an effort to soften the political blow, the PGA Tour extended consideration to US investors while stressing that PIF would only be a minority stakeholder.
The owners of the Boston Red Sox and Liverpool in the Premier League, Fenway Sports Group, finalized a $3 billion deal for the PGA Tour last week. Strategic Sports Group is a consortium.
After the original December 31 deadline was missed and LIV Golf’s financiers were left out of the SSG transaction, negotiations between the Public Investment Fund and the PGA Tour are still ongoing.
However, the document regarding the tour verified that a potential future co-investment from the Saudi Arabian fund remained available, contingent upon regulatory clearance.
According to the tour, talks on potential future investments and a final agreement with the Saudi national wealth fund were moving forward. As per the initial framework agreement, PIF governor Al-Rumayyan was supposed to serve as the chairman of PGA Tour Enterprises. The impact of the collaboration with SSG on that remained unclear. According to the tour, SSG has consented to any investment made by PIF, provided that it is approved and reviewed as required.